Gold prices edged down on Monday as the dollar rose and demand for safe-haven assets eased after US Treasury Secretary Steven Mnuchin said a trade war between China and the United States was “on hold”.
22k gold in Dubai is priced at Dh147 and buyers can buy 24k for Dh156.50.
Spot gold was down 0.2 percent at $1,289 per ounce at 0325 GMT.
US gold futures for June delivery were 0.2 percent lower at $1,288.20 per ounce.
The dollar rose versus the yen and hit a five month-high against a basket of currencies on Monday, after Mnuchin’s comments downplaying a trade dispute with China, boosting risk sentiment amid hopes for an easing of trade tensions between the world’s two biggest economies.
Mnuchin and US President Donald Trump’s top economic adviser, Larry Kudlow, said the agreement reached by Chinese and American negotiators on Saturday set up a framework for addressing trade imbalances in the future.
“You have this combination of technical factors which is at the moment un-supportive (for gold). As long as the dollar is on the firm side, gold is under pressure,” said Dominic Schnider at UBS Wealth Management in Hong Kong.
The price of gold fell below the psychologically important $1,300 per ounce level last week for the first time since late December and has since continued to trade below its 200-day moving average.
A stronger dollar makes dollar-denominated gold more expensive for holders using other currencies. Furthermore, rising US interest rates, and the expectation that US Federal Reserve will raise rates again next month, limits investor demand in non-yielding bullion.
“The dollar is a weak story in the medium-term but for the time being as interest rates continue to go up in the US, the momentum is not on gold,” Schnider said.
Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.1 percent to 855.28 tonnes on Friday.
Hedge funds and money managers cut their net long position in COMEX gold contracts by 21,294 contracts to 31,327 in the week to May 15, US Commodity Futures Trading Commission (CFTC) data showed on Friday.
In other precious metals, silver fell 0.1 percent to $16.39 an ounce.
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